Report: Apple Working On Low-Cost iPhone

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Following a report by Digitimes this morning citing industry sources, The Wall St. Journal is today confirming that it, too, hears that Apple is working on a low-cost version of the iPhone, which could launch as early as this year.

The phone could be made cheaper by using less expensive parts, the WSJ says. For example, it could use a different shell made of polycarbonate plastic, or parts recycled from older iPhone models. This isn’t the first time the WSJ has reported that Apple was exploring such a device – in 2011, it issued a similar report, again citing the ever-present “people familiar with the matter” as sources.

Such a device would be ideal in targeting developing markets, including China, where the iPhone’s high price is a concern. According to the WSJ report, Apple has been developing this cheaper iPhone for years, but could not decide how to move forward with the device.

If the report of the newer, cheaper iPhone is true, such a launch would position Apple to better compete with Android smartphones in emerging regions, where the move to smartphones is still a battle to be won. Android currently has the advantage, thanks to the variety of devices that can run the Android operating system, including those that come closer to matching the price point of the “feature phones” that users in these areas are upgrading from.

As mobile analytics provider Flurry noted a year ago, the largest addressable markets for mobile apps in 2012 included India, China, and Japan, among others. China in particular saw quick gains in 2012, with the country having climbed into the No. 2 spot in terms of new iOS and Android activations as of March. China is now Apple’s second-largest market, but iPhone sales are losing traction to competition from Samsung and Nokia, plus domestic handset makers like Huawei, ZTE, and Lenovo.

That being said, sales of the iPhone 5’s launch in China were reportedly strong, despite reports about the lack of lineups for the device. Apple later said it sold over 2 million units the first weekend.

According to the Digitimes report, the low-cost iPhone would have a larger screen than the iPhone 5, which doesn’t sound right – that would be costly. Digitimes, however, is more hit-or-miss in terms of its reporting. The WSJ, on the other hand, gives the rumor more credence.

Analysts have also said they believed Apple would have to launch such a device in order to reach the millions of users who couldn’t afford the current iPhone.